End user prices in liberalised energy markets

Mark Lijesen

No 16, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: As European energy markets move towards deregulation, energy prices shift from classic ‘cost plus' prices towards market prices. As European energy markets move towards deregulation, energy prices shift from classic ‘cost plus' prices towards market prices. We develop a model for the retail and wholesale energy markets in Europe, based on Bertrand competition in a two part pricing structure with switching costs. We use the model to forecast end user electricity and natural gas prices and find that the introduction of competition in energy retail and wholesale markets will decrease standing charges, lowering total costs for energy users. A larger number of entrants, a cost advantage for one of the suppliers, or lower switching costs reduces standing charges further.

JEL-codes: D43 L13 L22 L94 L95 Q41 (search for similar items in EconPapers)
Date: 2002-12
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Citations: View citations in EconPapers (3)

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